RBI Asked to Vet the Way Banks Raise Tier-II Funds

The government has asked the Reserve Bank (RBI) to set up a committee to look into the insurance regulator’s concerns that some of the instruments issued by banks to raise tier-II capital were perpetual and illiquid. The Insurance Regulatory & Development Authority (IRDA) has also said that some of these instruments are flouting its investment norms. The committee will look into issue of and subscription to tier-II instruments under the new Basel-III capitalisation guidelines, a finance ministry official said. “The insurance regulator has raised concerns over certain instruments. We have asked RBI to take up those issues,” the official said,........

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